Midwest mergers and acquisitions regain strength

Monday, January 06, 2014 3:21 PM

The number of Midwest companies that participated in a merger or acquisition over the past six months rebounded in the third quarter of 2013, according to the Bridgepoint Midwest M&A Index Report. After decreasing in the previous two quarters, the index increased to 107.3, a 15.4 percent gain from the second quarter.

The rebound was fueled by support from aggressive capital markets for leveraged deals and record levels of cash held by U.S. corporations, Adam Claypool, managing principal of Bridgepoint Merchant Banking, said in a release. Bridgepoint has offices in Lincoln, Neb., and Des Moines.

"After deal closings were pulled forward at the end of 2012, we continue to see many deals in progress in the first half of the year with momentum in closings expected to continue in the fourth quarter of 2013 and into next year," Claypool said. "The capital markets remain as aggressive as perhaps they've ever been, with lenders offering attractive leverage levels and terms to support transactions."

Quarterly M&A transactions with Midwest buyers remained relatively constant at 129 deals in the third quarter, compared with 130 in the second quarter. Transactions with Midwest targets increased from 150 to 186 in the third quarter, which indicates a strong appetite for Midwest companies, the report said.

Bridgepoint also reported that median Midwest M&A valuations declined in the latest quarter, but remained at historically elevated levels. The broader U.S. deal environment also saw a solid rebound, with Pitchbook.com reporting the strongest private equity deal flow of 2013 in the latest quarter.

Of the Midwest M&A transactions with available transaction values, quarterly median deal size increased from $13.8 million in the second quarter to $17.5 million in the third quarter.